LONDON (MNI) – The Central Bank of Ireland and the Financial
Services Authority today published the following statement on plans
issued by the Financial regulator to recapitalise the Irish banks.
“The Financial Regulator has today (30 March 2010) published the
results of its review of banking capital requirements for the next three
years until 2012. New capital levels are being set for some of the main
banks covered under the government guarantee to ensure that they can
withstand future losses, even under very stressed conditions.
“These measures are a long term solution and should ensure that
Irish banks move to a strong capital position as soon as possible to
speed their recovery and that of the economy.
“A level of 8% of core tier 1 capital to be attained by the end of
this year is to be applied. This level of capital must be met after
taking account of all future losses, from both NAMA and non-NAMA
portfolios. This capital will be principally in the form of equity – a
7% equity requirement.
“Equity is the highest quality form of capital, and the emerging
international standard. In addition, further amounts, specific to each
institution, are to be added on in the calculation of future loan
losses. The new requirements also mean that banks cannot go below a
level of 4% core tier 1 capital in a severely stressed scenario.
“Speaking today, Governor of the Central Bank, Patrick Honohan
said, “After a period of great uncertainty, these actions and
announcements create a secure platform on which confidence will be
built. While the costs that are today revealed are certainly
significant, they are manageable and affordable for the Irish State.
“They are certainly a necessary measure to put the banking crisis
behind us and provide for a stronger economy.”
Head of Financial Regulation, Matthew Elderfield said, “It is
important that our banks move to a strong capital position as soon as
possible and that we draw a line under the Irish banking crisis.
Sufficient capital is an essential ingredient to ensure that banks can
withstand future losses. We have applied a robust, realistic and prudent
capital standard informed by our own detailed analysis and by emerging
best practice internationally.”
“The capital requirements set by the Financial Regulator must be in
place by the end of 2010. The institutions will be required to submit
recapitalisation plans to the Financial Regulator within 30 days”.
–London: 0044 207 862 7492; email: ukeditorial@marketnews.com
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